Consolidated sales were $113.8 million for the fourth quarter of 2016 compared to $115.6 million for the fourth quarter of 2015, a decrease of 1.5%.

Operating income for the quarter was $9.0 million or 7.9% of sales as compared to $8.7 million or 7.5% of sales for the prior year quarter.

Wholesale sales were $62.6 million for the fourth quarter of 2016 compared to $64.5 million for the fourth quarter of 2015, a decrease of 3.0%. Wholesale operating profit for the quarter was $4.3 million or 6.9% of sales as compared to $4.1 million or 6.4% of sales for the prior year
quarter.

Company-owned store sales were $69.9 million for the fourth quarter of 2016 compared to $66.3 million for the fourth quarter of 2015, an increase of 5.5%. This included a comparable store sales increase of 4.3% compared to the prior year quarter. Comparable store operating income was $3.4 million or 5.2% of sales for the current year quarter as compared to $2.9 million or 4.6% of sales for the prior year quarter. Total retail operating income was $2.9 million or 4.1% of sales for the quarter as compared to $2.2 million or 3.3% of sales for the prior year quarter. Comparable store written sales for the quarter increased 3.3%.

Revenue for Zenith was $24.2 million for the fourth quarter of 2016 compared to $25.6 million for the fourth quarter
of 2015, a 5.5% decrease. Zenith's operating profit for the quarter was $1.4 million or 5.9% of sales as compared to $1.4 million or 5.6% of sales for the prior year quarter.

Net income for the quarter was $5.0 million or $0.47 per diluted share as compared to $5.7 million or $0.52 per diluted share for the prior year quarter.

"Led by a strong performance from our corporate retail segment, we closed the year on a high note," commented Robert H. Spilman, Jr., Chairman and CEO. "After a sluggish start to the year, both our corporate and licensed retail store groups finished 2016 positively, largely due to the comparable store sales momentum that they generated during the second half of the year. We look ahead to a new
year that will see us make significant investments in our store network, expand our digital presence, upgrade our manufacturing facilities and broaden our logistics platform."

Wholesale Segment

Net sales for the wholesale segment were $62.6 million for the fourth quarter of 2016 as compared to $64.5 million for the fourth quarter of 2015, a decrease of $1.9 million or 3.0%. This decrease was driven by lower shipments to the open market (outside the Bassett Home Furnishings network) partially offset by a 5.7% increase in shipments to the Bassett Home Furnishings network as compared to the prior year period. The decrease in sales to the open market was primarily due to lower sales of imported
product primarily from the discontinuation of our relationship with a significant customer and loss of sales from the HGTV Home Collection brand, exited late in 2015. Gross margins for the wholesale segment were 35.5% for the fourth quarter of 2016 as compared to 33.9% for the fourth quarter of 2015. This increase is due primarily to improved margins in the imported wood product as significant margin adjustments were necessary in the fourth quarter of 2015 as the Company was exiting the HGTV Home Collection brand. Wholesale SG&A for the fourth quarter of 2016 was $17.9 million as compared to $17.7 million for the prior year period. SG&A as a percentage of sales increased to 28.7% as compared to 27.5% for the fourth quarter of 2015. This increase in SG&A as a percentage of sales was primarily driven by higher marketing and advertising costs. Operating
income was $4.3 million or 6.9% of sales as compared to $4.1 million or 6.4% of sales in the prior year.

"Our product assortment continues to undergo an important makeover as we seek more sales," continued Spilman. "From our wood division, the Peninsula collection, the Wood Haven bedroom, the Bench Made bedroom, and several new occasional offerings hit our stores in December in advance of the key holiday selling weekends that start the year. In upholstery, the Designer Comfort and American Casual collections arrived in the stores on the same schedule. In addition to these assortment changes, two other new product offerings are significant as we look ahead. A revamped casual dining program was introduced at the October High Point Market which will begin shipping to our dealers and stores in February. This program has been a
stalwart contributor to our wood sales for over 15 years and we have made capital investments in finishing technology in our Martinsville, Virginia manufacturing facility to produce the latest advancements in today's marketplace. In addition to the work at the Martinsville facility, we will move our Zenith Logistics Texas distribution center and our Texas upholstery factory into a new 375,000 square foot building in mid-February. By housing both of these entities under one roof, we expect to gain efficiency and cut costs. The October show also included the debut of Club Level by Bassett, a major foray into the growing motion upholstery
category. Primarily aimed at the open market channel but also featured in select Bassett stores, Club Level was met with enthusiasm by our independent dealer base and is already showing potential with the initial retail sell through results. Taken collectively, this new product effort will be a key determinant in the fortunes of Bassett in 2017 and our management will spend significant time in the field to make it successful."

Retail Segment

Net sales for the 59 Company-owned Bassett Home Furnishings stores were $69.9 million for the fourth quarter of 2016 as compared to $66.3 million for the fourth quarter of 2015, an increase of $3.6 million or 5.5%.
The increase was due to a $2.8 million or 4.3% increase in comparable store sales along with a $0.9 million increase in non-comparable store sales.

While the Company does not recognize sales until goods are delivered to the consumer, management tracks written sales (the retail dollar value of sales orders taken, rather than delivered) as a key store performance indicator. Written sales for comparable stores increased by 3.3% for the fourth quarter of 2016 as compared to the fourth quarter of 2015.

The consolidated retail operating profit for the fourth quarter of 2016 was $2.9 million as compared to $2.2 million for the fourth quarter of 2015, an increase of $0.7 million. The 56 comparable stores generated operating income of $3.4 million for the
quarter, or 5.2% of sales, as compared to $2.9 million, or 4.6% of sales, for the prior year quarter. Gross margins for comparable stores were 50.2% for the fourth quarter of 2016 compared to 50.4% for the fourth quarter of 2015. SG&A expenses for comparable stores increased $0.8 million to $30.0 million or 45.0% of sales as compared to 45.8% of sales for the fourth quarter of 2015. The decrease in SG&A as a percentage of sales was primarily due to greater leverage of fixed costs due to higher sales volumes for the comparable stores.

"We were pleased with the performance of our retail segment during the second half of the year and we look to the future with excitement as we work to expand our 59 store corporately owned network," said Spilman. "2016 was foundational to our blueprint for store expansion in 2017 and
beyond. This included repositioning one store, closing three, and opening two new ones in the year just ended. Furthermore, a tremendous amount of site selection and real estate negotiations took place during the year as we prepare to open six new stores and reposition two others over the course of 2017. Four of the new stores are expansions of existing markets and the other two are brand new. Therefore, 2017 will be a year of investment as we absorb in excess of $2 million more in preopening and startup costs than we experienced in 2016. In addition to these up front expenses, proper site selection, store economics, and staffing are major challenges that must be met in order to successfully execute store expansion and these factors cannot be compromised. While we do not provide financial forecasts externally, we do believe that we have the ability to open five to
six new stores annually in addition to strategically repositioning stores when warranted. With a track record of six consecutive years of positive same store sales and our focus on store productivity, we are intent on taking our concept to new markets and consistently growing our overall store count in the years to come."

About Bassett Furniture Industries, Inc.Bassett Furniture Industries, Inc. (NASDAQ:BSET), is a leading manufacturer and marketer of high quality, mid-priced home furnishings. With 90 company- and licensee-owned stores at the time of this release, Bassett has leveraged its strong
brand name in furniture into a network of corporate and licensed stores that focus on providing consumers with a friendly environment for buying furniture and accessories. The most significant growth opportunity for Bassett continues to be the Company's dedicated retail store program. Bassett's retail strategy includes affordable custom-built furniture that is ready for delivery in the home within 30 days. The stores also feature the latest on-trend furniture styles, free in-home design visits, and coordinated decorating accessories. Bassett also has a traditional wholesale business with more than 700 accounts on the open market, across the United States and internationally. For more information, visit the
Company's website at bassettfurniture.com. (BSET-E)

Certain of the statements in this release, particularly those preceded by, followed by or including the words "believes," "expects," "anticipates," "intends," "should," "estimates," or similar expressions, or those relating to or anticipating financial results for periods beyond the end of the fourth fiscal quarter of 2016, constitute "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended. For those statements, Bassett claims the protection of the safe harbor for forward looking statements contained in the Private Securities Litigation Reform Act of 1995. In many cases, Bassett cannot
predict what factors would cause actual results to differ materially from those indicated in the forward looking statements. Expectations included in the forward-looking statements are based on preliminary information as well as certain assumptions which management believes to be reasonable at this time. The following important factors affect Bassett and could cause actual results to differ materially from those indicated in the forward looking statements: the effects of national and global economic or other conditions and future events on the retail demand for home furnishings and the ability of Bassett's customers and consumers to obtain credit; and the economic, competitive, governmental and other factors identified in Bassett's filings with the Securities and Exchange Commission. Any forward-looking
statement that Bassett makes speaks only as of the date of such statement, and Bassett undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Comparisons of results for current and any prior periods are not intended to express any future trends or indication of future performance, unless expressed as such, and should only be viewed as historical data.

﻿

BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income - unaudited

(In thousands, except for per share data)

Quarter Ended

Year Ended

November 26, 2016

November 28, 2015

November 26, 2016

November 28, 2015

Percent of

Percent of

Percent of

Percent of

Amount

Net Sales

Amount

Net Sales

Amount

Net Sales

Amount

Net Sales

Sales revenue:

Furniture and accessories

$

100,339

$

101,283

$

377,196

$

387,405

Logistics

13,447

14,272

54,842

43,522

Total sales revenue

113,786

100.0

%

115,555

100.0

%

432,038

100.0

%

430,927

100.0

%

Cost of furniture and accessories sold

43,023

37.8

%

45,615

39.5

%

167,519

38.8

%

179,291

41.6

%

Selling, general and administrative expenses excluding

new store pre-opening costs

61,333

53.9

%

60,847

52.7

%

235,178

54.4

%

224,050

52.0

%

New store pre-opening costs

421

0.4

%

387

0.3

%

1,148

0.3

%

623

0.1

%

Lease exit costs

-

0.0

%

-

0.0

%

-

0.0

%

419

0.1

%

Asset impairment charges

-

0.0

%

-

0.0

%

-

0.0

%

106

0.0

%

Management restructuring costs

-

0.0

%

-

0.0

%

-

0.0

%

449

0.1

%

Income from operations

9,009

7.9

%

8,706

7.5

%

28,193

6.5

%

25,989

6.0

%

Remeasurement gain on acquisition of affiliate

-

0.0

%

-

0.0

%

-

0.0

%

7,212

1.7

%

Income from Continued Dumping & Subsidy Offset Act

240

0.2

%

90

0.1

%

240

0.1

%

1,156

0.3

%

Other loss, net

(752

)

-0.7

%

(797

)

-0.7

%

(2,656

)

-0.6

%

(2,489

)

-0.6

%

Income before income taxes

8,497

7.5

%

7,999

6.9

%

25,777

6.0

%

31,868

7.4

%

Income tax provision

3,452

3.0

%

2,317

2.0

%

9,948

2.3

%

11,435

2.7

%

Net income

$

5,045

4.4

%

$

5,682

4.9

%

$

15,829

3.7

%

$

20,433

4.7

%

Basic earnings per share

$

0.47

$

0.53

$

1.47

$

1.91

Diluted earnings per share

$

0.47

$

0.52

$

1.46

$

1.88

BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

Assets

November 26, 2016

November 28, 2015

Current
assets

Cash and cash equivalents

$

35,144

$

36,268

Short-term investments

23,125

23,125

Accounts receivable, net

18,358

21,197

Inventories, net

53,215

59,896

Other current assets

10,727

6,798

Total current assets

140,569

147,284

Property and equipment, net

104,655

96,104

Other long-term assets

Deferred income taxes, net

8,071

13,471

Goodwill and other intangible assets

17,360

17,682

Other

7,612

8,002

Total long-term assets

33,043

39,155

Total assets

$

278,267

$

282,543

Liabilities and Stockholders' Equity

Current liabilities

Accounts payable

$

21,281

$

20,916

Accrued compensation and benefits

13,602

14,345

Customer deposits

25,181

23,999

Dividends payable

3,218

2,184

Current portion of long-term debt

3,290

5,273

Other accrued liabilities

10,441

13,133

Total current liabilities

77,013

79,850

Long-term liabilities

Post employment benefit obligations

12,760

12,694

Long-term debt

3,821

8,500

Other long-term liabilities

3,968

4,133

Total long-term liabilities

20,549

25,327

Stockholders' equity

Common stock

53,615

54,580

Retained earnings

129,388

120,904

Additional paid-in-capital

255

4,560

Accumulated other comprehensive loss

(2,553

)

(2,678

)

Total
stockholders' equity

180,705

177,366

Total liabilities and stockholders' equity

$

278,267

$

282,543

BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows - unaudited

(In thousands)

Year Ended

November 26, 2016

November 28, 2015

Operating activities:

Net income

$

15,829

$

20,433

Adjustments to reconcile net income to net cash provided by

(used in) operating activities:

Depreciation and amortization

12,249

10,137

Equity in undistributed income of investments and unconsolidated

affiliated companies

-

(220

)

Non-cash asset impairment charges

-

106

Non-cash portion of lease exit costs

-

419

Remeasurement gain on acquisition of affiliate

-

(7,212

)

Tenant improvement allowances received from lessors

914

1,283

Deferred income taxes

5,324

1,930

Collateral deposited with insurance carrier

(300

)

-

Excess tax benefits from stock-based compensation

87

1,998

Other, net

1,055

2,082

Changes in operating assets and liabilities

Accounts receivable

3,228

(2,354

)

Inventories

6,681

(2,624

)

Other current and long-term assets

(3,629

)

1,494

Customer deposits

1,182

1,796

Accounts payable and accrued liabilities

(3,558

)

5,128

Net cash provided by operating activities

39,062

34,396

Investing activities:

Purchases of property and equipment

(21,501

)

(13,974

)

Proceeds from sale of retail real estate and property and equipment

667

2,981

Cash paid for business acquisition, net of cash acquired

-

(7,323

)

Capital contribution to affiliate

-

(1,345

)

Net cash used in investing activities

(20,834

)

(19,661

)

Financing activities:

Cash dividends

(6,311

)

(5,786

)

Proceeds from the exercise of stock options

114

4,031

Other issuance of common stock

182

325

Repurchases of common stock

(6,393

)

(2,071

)

Taxes paid related to net share settlement of equity awards

(77

)

(178

)

Repayments of notes payable

(14,251

)

(2,768

)

Proceeds from equipment loans

7,384

1,307

Net cash used in financing activities

(19,352

)

(5,140

)

Change in cash and cash equivalents

(1,124

)

9,595

Cash and cash equivalents - beginning of period

36,268

26,673

Cash and cash equivalents - end of period

$

35,144

$

36,268

BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES

Segment Information - unaudited

(In thousands)

Quarter Ended

Year Ended

November 26, 2016

November 28, 2015

November 26, 2016

November 28, 2015

Net Sales

Wholesale

$

62,561

$

64,505

$

240,346

$

252,180

Retail - Company-owned stores

69,913

66,266

254,667

249,379

Logistical services

24,227

25,643

95,707

77,250

Inter-company eliminations:

Furniture and accessories

(32,135

)

(29,488

)

(117,817

)

(114,154

)

Logistical services

(10,780

)

(11,371

)

(40,865

)

(33,728

)

Consolidated

$

113,786

$

115,555

$

432,038

$

430,927

Operating Income

Wholesale

$

4,292

$

4,100

$

18,672

$

15,618

Retail

2,868

2,203

4,333

6,170

Logistical services

1,432

1,439

3,511

3,528

Inter-company elimination

417

964

1,677

1,647

Lease exit costs

-

-

-

(419

)

Asset impairment charges

-

-

-

(106

)

Management restructuring costs

-

-

-

(449

)

Consolidated

$

9,009

$

8,706

$

28,193

$

25,989

BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES

Rollforward of BHF Store Count

November 28,

November 26,

2015

Opened*

Closed*

2016

Company-owned stores

60

2

(3

)

59

Licensee-owned stores

33

-

(2

)

31

Total

93

2

(5

)

90

* Does not include openings and closures due to relocation of existing stores within a market.